Trading platform Robinhood has announced its intention to stop supporting the cryptocurrencies Cardano, Polygon, and Solana as of June 27, reflecting the mounting legal concerns within the cryptocurrency sector in the wake of the SEC’s recent cases against significant crypto exchanges.
As of June 27th, Robinhood will no longer allow Cardano (ADA), Polygon (MATIC), and Solana (SOL) on its platform, according to a recent development. This statement is unexpected because the platform merely provided a brief justification for its decision, stating that it was “based on our latest review.”
Robinhood guarantees customers that this move will not affect any other cryptocurrencies on the platform, except ADA, MATIC, and SOL.
The remaining ADA, MATIC, or SOL holdings in users’ Robinhood Crypto accounts will be automatically liquidated at market value after the June 27 deadline, with the proceeds being credited to the users’ cash balances inside Robinhood.
The SEC filed its historic litigation against the cryptocurrency giants the same week that Robinhood decided to delist three of the cryptocurrencies from its platform. The business has not stated if the enforcement proceedings had an impact on its decision.
According to SEC Chair Gary Gensler, these tokens satisfy the Howey Test’s definition of an investment contract, which is a subset of securities. Gensler made this clarification in statements to the public. AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO are all listed as securities in the watchdog’s lawsuit.
The claims have cast doubt on the future of these tokens on significant cryptocurrency platforms, with Robinhood being the first to respond.
The SEC has emphasized in the lawsuits that the burning mechanisms of the SOL and MATIC tokens encouraged investors to see such investments as possible sources of profit.
It was asserted that because Solana has a built-in mechanism to reduce supply and therefore raise the price, investors might view their SOL purchases as possibly advantageous as a result of the “deflationary mechanism,” which involves burning SOL.
The SEC further claimed that Polygon advertised that it burned MATIC tokens accumulated as fees, indicating a decrease in the MATIC supply.
Although Robinhood has stopped supporting these three currencies, it has made it clear that customers are not required to liquidate their holdings of ADA, MATIC, and SOL. These investments can be transferred outside of the Robinhood account. The tokens will be automatically sold if customers don’t act by the deadline, with the funds going into their Robinhood account.
The exact reasons behind Robinhood’s delisting of ADA, MATIC, and SOL have not yet been made public, although it is thought that recent regulatory enforcement measures within the crypto business may have had an impact.
The future of these digital assets now has some uncertainty due to this ruling and future legal battles. We will have to wait and see whether these legal actions have more significant repercussions for other cryptocurrencies or whether other platforms will delist ADA, MATIC, and SOL like Robinhood did.